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Sector movers: Vodafone cash return lifts mobile telecoms higher

Speculation surrounding the cash windfall for Vodafone shareholders gave the mobile telecoms sector a boost on Friday, as the firm's sale of its stake in Verizon Wireless will prompt the largest capital return in corporate history.

According to analysts at Bank of America Merrill Lynch, the transaction will have a drastic impact on UK trading volumes over the next few weeks as investors look to re-distribute their cash.

As part of the $130bn deal to dispose of Vodafone's 45% stake in its joint venture with Verizon, 71% of the proceeds - $23.9bn in cash and $60.2bn in Verizon shares - will be given back to Vodafone shareholders when the deal completes on Friday.

With a third of these shareholders based in the UK, BofA said that market volumes will be significantly affected "by the re-investment of cash proceeds, the scale of flowback in Verizon shares (both automatic and discretionary), and the rebalancing of index weightings (particularly the FTSE 100 and FTSE 250)".

While the broader market sentiment was given a lift by the sale, Market Analyst Chris Beauchamp from IG said that Vodafone "remains the darling of UK investors" today after receiving favourable coverage from a number of brokers.

"Strong capital growth and a healthy dividend mean that this company will continue to retain a special place in the hearts of many," he said.

Vodafone was up 2.6% at 235.6p today, nearing the 52-week high of 241.12p reached last month.

Others in the sector including Inmarsat, Avanti Communications and Monitise were also trading higher this afternoon.

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